| Value Increased |
Value Decreased |
| Equity position of 20% or more |
Limited equity/Small down payments |
|
First mortgage
|
Second mortgage. These are often worth only 50% of the current balance due to the increased risk of total loss if there is a default on the first. (CFS does not work with 2nd. position real estate notes unless the balance is les than the first) |
| 5-10 year maturities, or longer term amortization with balloon |
Long term fully amortizing obligations (no balloons) |
|
Good borrower credit
|
Bad borrower credit |
| Seasoned note with satisfactory payment history |
Unseasoned note or simultaneous closing |
|
Mortgage payments current
|
Mortgage in default and/or in foreclosure |
| Market interest rate for risk involved |
Below Market interest rate for risk involved |
|
Late charge provision in note
|
No late charge provision on the note |
| Due on sale/right to approve Assumptor clause |
No due on sale or Assumption/Approval right |
|
Financial statement on borrower
|
No Financial statement on borrower |
| First mortgage or large second mortgage relative to first |
Large amount of debt senior to subject debt (on junior liens only) |
| Step rates which increase interest rate over time (not usual) |
Interest Only note
|
|
Timber cutting clause on acreage properties
|
No timber cutting clause on acreage properties |
| Flood insurance required and maintained if property is in flood zone |
Property in a flood zone without flood insurance |
|
Professional note collection by third party
|
Seller collects own payments |
| Cross default clause in junior liens (default on first mortgage is grounds to default the second, even if current) |
No cross default clause in junior liens (default on first mortgage can mean second is wiped out and holder of second has no right to default the second, if it is current) |
| Credit report on borrower available and up to date |
No credit report on borrower and no right to pull one |
|
Reasonable sized mortgage compared to the property value
|
Small size note or contract |
| Well written and structured note and Deed Release provisions |
Badly written note |
|
Title insurance available and no exclusions
|
No title insurance |
| |
Subordination clause that could force the note into lower priority |
| Mortgage on single family home, owner occupied |
In reducing order. Second home. Tenant occupied home, apartments, offices, warehouse, industrial, mobile home, vacant land (least desirable)
|
